MS breakup to cost $147bn, $507 a head, say crazies

Full moon again already? Grief...

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"Anyone owning shares of Microsoft has become all-too-well aware of what happens when the risk associated with an investment suddenly increases. Until this year, Microsoft was one of the best stocks to own..." All very true of course, but it is hard to feel sorry for punters - apparently including the authors of a report entitled The real economic costs of the Microsoft decision - who have had years of warning that there could be a downside.

The report, published by the Lewisville, Texas-based Institute for Policy Innovation's Center for Technology Freedom, has appointed itself to sort out the challenges posed by technology and makes some claims about the cost of the Microsoft case to the US taxpayer that will probably make even Microsoft chuckle.

The authors, Gary and Aldona Robbins - formerly economists at the US treasury department - warn that the US GDP would be lower by $147.2 billion, and punishing Microsoft would cost every man, woman and child in the US $507. They also make several other startling claims, such as the loss of 44,900 jobs, $59.6 billion less in personal income, and so on. They make several fundamental mistakes in their partisan summary of the legal issues - the remedies were not proposed or recommended, for example - they were ordered by a federal judge.

The authors assumed that $60 billion of Microsoft's $210 billion fall in market capitalisation between January and June resulted from the effects of the antitrust case on the share price, and then plug this value into their "general equilibrium, neoclassical model" to see how the economy might be affected. It must be some model if it can produce forecasts to four significant digits. It is also rather a big leap to assume that a reduction in market capitalisation could have such effects on the economy, since if all such market cap reductions were added together, the result would be penury all round, which is not exactly what is happening in the US.

There's no information as to whether Microsoft is a contributor to the IPI, which says it accepts contributions from individuals, businesses and non-profit organisations - but not from government agencies. ®